The Case for Lending Out Your Star Performers

How do you get the talent you need? You either go out and buy it, or you develop the talent you already have. Historically, organizations have swung between these two ends of the external-internal spectrum depending on the economy, the labor pool, and the strategic imperative — do we need new talent and capabilities right now or do we have the time to grow them? But there is an emerging third way: talent loans.

Borrowing and lending talent offer distinct advantages that traditional methods don’t. When you borrow talent, you obtain what you need more cost effectively than hiring it and without making a long-term commitment; and when you lend talent you’re offering your stars and high-potentials new opportunities for growth and development that they might not otherwise get within the confines of your organization.

Borrowing and lending talent is common and even essential in one particular industry — professional soccer. Soccer clubs form a global network that routinely lends and borrows players. Such loans have advantages for the lender: they accelerate player development and/or reduce costs by removing the salary of the loaned player from the lending club’s books. The loans also benefit the borrowers: they can strategically access talent for they would not otherwise be able to attract or afford, and use them for just the few months or a season that the talent is most needed.

For example, Tom Caroll was loaned from Tottenham Hotspur in the English Premier League to Swansea City. Caroll is a young, highly talented midfielder with a bright future. Yet, he found his path to the first team at Tottenham blocked by other more established players. Tottenham Hotspur feared that the lack of first team action would stunt Caroll’s development and growth. Swansea City was a club looking for a midfield player with flair and skill. Its financial position meant that Swansea City had two choices: Buy a lesser player and incur the transfer cost that one club must pay another to acquire one of its players; or borrow the much more skillful Caroll and merely pick up the cost of his salary for one season. Swansea City gets a player of much higher quality than they could hire, and Tottenham Hotspur gets Caroll having the first team action so critical to his development. Both clubs realize a unique win-win. A key to these arrangements is a governance structure and agreed rules for making the loans, so that the advantages outweigh the costs for each team. For example, in the Premier League, players on loan are not permitted to play against the team loaning them. Loanees are, however, allowed to play against their “owning” clubs in cup competitions, unless they have played for their owning club in the cup during that particular season.

The league plays the role of “banker or broker,” facilitating smooth and advantageous loans between clubs.

Such loans are not limited to the soccer pitch. In Transformative HR, we described Khazanah Nasional, the investment arm of the Malaysian government. Khazanah recognized that Malaysia needed future national leaders with a wide variety of experiences that were far more varied than any of the individual companies in their portfolio could offer alone. Khazanah convinced their portfolio companies to trade their leaders. For example, the power company Tenaga Nasional could send a leader with strong operating capabilities to work for several years at Malaysia Airlines, acquiring skills in turning around a troubled business. A leader with significant experience in negotiating international energy agreements moved from Petronas, the national oil company, to Telekom Malaysia where she acquired skills in operating an integrated telecommunications network. The employees would get a great development experience, the lending companies would get better returning leaders, and the receiving companies would get top talent, and Malaysia would become an advanced economy by building a deeper pool of leaders.

The proposal was not immediately welcomed by the companies who anticipated all sorts of problems with contracts, arrangements and equity. Khazanah made it work by acting as a broker. Like the Premier League in soccer, Khazanah plays the role of investor and broker, creating a structure that allows the borrowing and lending companies to mitigate the risk and costs of managing the loans themselves.

Admittedly, these cutting edge examples of talent lending are still rare. More common is the opportunity we see for companies to get in the game by rethinking their boomerang employees. Most organizations regard such departures as regrettable employee “turnover,” to be avoided. Even if organizations allow employees to rejoin, such moves are often left to chance. Why leave such valuable opportunities to chance? Why not strategically allow some of your best talent to go outside for new skills and capabilities, and then lasso them back in?

One particular story of a boomerang employee shows how valuable they can be. Peter Voser, the CEO of Royal Dutch Shell from July 2009, retired in May 2013. Voser had more than 25 years of experience at Shell, having joined the company in 1982. Historically, Shell’s top leaders spent their careers at the company. But unlike many Shell leaders, Voser’s career was not continuous. He spent two years as the CFO of power and automation company ABB, from 2002 to 2004, before returning to Shell as CFO. In an interview in 2009, when he became the CEO at Shell, Voser said, “I left Shell for a short period to go to work for ABB. The main driver for me was to be CFO of a quoted company. I wanted that experience. I was ready and impatient with myself, and I couldn’t see that happening quickly enough at Shell.”

Like Voser, your future leaders could gain valuable experiences outside your organization. Shell is a global organization facing similar challenges to most organizations. Yet, even such a large and global organization benefited from the departure and return of this key leader. Voser’s ascension to the CEO role, after he returned to Royal Dutch Shell was notable for a “blunt” memo describing the need to change a culture that was “too consensus oriented,” to create a stronger performance culture. Voser was qualified to make such observations, given his credibility as an insider with 25 years’ experience at Shell, but perhaps his most unique qualification was the formative experience at ABB. Had he not tossed himself away from Shell, returning at just the right time and place, he would have been less qualified for the Shell CEO role.

The question is not so much whether Khazanah or the Premier League are anomalies, but whether you can afford to think about leadership development solely within your organizational boundary, any more than you think about acquiring and deploying financial resources only within your boundary. Few organizations fund themselves only with money they generate inside. Financial resources from one organization flow to another, and flow back again when it’s advantageous to both. Of course, people are not the same as financial assets, but can you afford to ignore the potential value in cross-boundary leadership development, simply because it is rare? Should your leadership development systems at least consider cross-boundary experience as an option? How could you create a brokering system to make such experiences easier?

Shell is a massive global organization with lots of career opportunities and yet even Shell could not give Voser the needed career experiences fast enough. In organizations even smaller than Shell it is even more difficult to create needed leadership development exclusively inside the organization. It will be even more difficult in a fast-changing environment that won’t wait decades for you to move your leaders through formative experiences. Yet, just outside your boundary are organizations filled with the experiences you need, some of them with a similar need for their leaders to get your experiences.

David Creelman is CEO of Creelman Research. He researches and writes about human capital management.

John Boudreau is Professor of Management Organization at the University of Southern California’s Marshall School of Business and Research Director at the university’s Center for Effective Organizations. He is an expert on the bridge between superior human capital, talent, and sustainable success and the author of many books and articles, including his latest book with Ravin Jesuthasan, Reinventing Jobs: A 4 Step Approach for Applying Automation to Work. Follow him on Twitter at: @JohnWBoudreau.